We are running out of David Glass photos. - Ed Zurga
The Royals owner claims he's breaking even. The numbers say that's highly suspect.
Let's just say the Royals owner is now officially his own worst enemy.
"We don’t have a hard number on anything."
I’ll buy this. And amazingly, it makes a wonderful amount of sense. Professional sports teams should all operate with a "soft" cap where they set a target and have the flexibility to move past that target by something like 15 percent. This is something Glass has stated time and again that when the time is right, he will allow the Royals to move payroll beyond a "soft" cap amount. He kind of sort of did this back in 2003 when the Royals were in the race late in the season.
While they don't have a "hard" number, they most certainly have a target. They most certainly do.
"I would tell you that for us to break even, our payroll has to be in the $70 million range. But as we’ve discussed before, we will react based on what our opportunities are."
And there you go. $70 million it is.
Obviously, Glass will never, ever open his team’s books but this is as cut and dry as you can make it. He is claiming the break even point is close to $70 million.
Except, according to the numbers from Forbes, that's not close to being correct.
They say, when the Royals had a $70 million payroll back in 2009, they had an operating income of $8.9 million.
"Look, you might have a $65-to-$70 million payroll, but then you go out and spend $25-$30 million in amateur bonuses. Everyone says, ‘Well, your payroll is less than some of the other teams,’ but those other teams were spending less than $10 million in amateur bonuses."
The smoking gun...
First, the idea the Royals have spent upwards of $30 million in amateur bonuses is highly suspect. JJ Cooper from Baseball America (who has been doing an outstanding job covering this in the limited spectrum that is Twitter) notes the most the Royals ever spent on a draft was in 2011 when they drafted Bubba Starling and committed a total of slightly over $14 million. That year, according to Baseball America, they spent $6.8 million on the international market. That's a commitment of just under $21 million. Not even close to the $30 million floated by Glass.
To top it off, that was the year the Royals committed to The Process and had an Opening Day payroll of $38.2 million. So in that season the payroll and bonus expenditure was roughly $59 million.
In the interest of fairness, let's flip the numbers and look at a year when the Royals had a high payroll. In 2010, Opening Day payroll was a club record $75 million. That year, the Royals spent $2.7 million on the international market and committed $6.7 in draft bonuses. That's a little above $84 million.
Further, in 2009 payroll was $70.5 million. That year the Royals spent $6.7 on the draft and various estimates put them at over $6 million on the international market. That's a little above $83 million.
We can say with confidence the most the Royals have ever spent on payroll and amateur bonuses was under $85 million. Yet Glass says they have had years with a $70 million payroll (true) while they went out and spent $30 million on bonuses. (Not so true.)
Besides, for Glass to bring up amateur bonuses is a total non-starter now because of the CBA. Glass is either A) deliberately misleading, or B) out of touch with the economic realities of the game.
Neither option is promising.
"In a number of those years, if you add what we’re spending on amateur bonuses to our (major-league) salaries, we’re spending a lot of money."
We've already established the bonus numbers are suspect. Now is the time to dive deeper into the Fuzzy Math.
The new collective bargaining agreement effectively places a cap on the amount teams can spend on amateur bonuses. According to Baseball America, last year the Royals spent $6.2 million on the draft. This number will vary from year to year based on draft position and other factors. (Yes, the Royals can exceed the draft bonus cap. However, the penalties for going over the limit are exceptional. We're talking forfeiture of draft picks for going over by as little as five percent. There is no reason for the Royals to top their limit.) Additionally, the club was further capped internationally to the tune of $2.9 million. Baseball America says their total bonus expenditure was $7.6 million.
Remember how Glass mentioned they've spent $30 million in the past in this area? If that's true, the Royals, because of the limits of the new CBA, have around $21 million in cash that is available. So why not sink that into payroll? Why, if they added that bonus money into the "soft cap" of $70 million, the Royals payroll could come in around $90 million.
These are Glass' numbers. He says the payroll has to be at $70 million for him to break even. Those numbers make it seem like he has an extra $20 million in his pocket from the capped bonus pool. Therefore, it only follows that he can spend $90 million. These numbers just don't add up.
Of course, no one believes Glass is only breaking even. No one believe the Royals ever spent $30 million in signing bonuses.
After talking to the Star, David Glass doesn't have a shred of credibility remaining.
"The thing being discussed that borders on ridiculous is the $70 million payroll," Glass said. "I’ve always said that whatever money the franchise generates, we’re willing to put it all back in — whether it’s in amateur bonuses or payroll or scouting.
Again, that's not what Forbes says. But David Glass says Forbes doesn't have accurate numbers.
Baseball owners are a tight-knit fraternity. They will never, ever voluntarily open their books. However, as JJ Cooper noted the Florida Marlins made similar claims that the Forbes numbers were incorrect. Yet when their financial documents were leaked to Deadspin, it showed they were spot on.
"I’m even willing to go further and subsidize it at a time when we’ve got a chance to win our division or really be competitive. We’re at that time, so now you get to the point where it depends on what’s available."
You can't see me right now. But I'm playing the world's smallest violin.
At least he senses The Process has opened a slight window of opportunity. Given the market size and the poor judgement shown by the major league talent evaluators, they are only going to get one shot.
"So now you get to the point where it depends on what’s available," he said. "You say, ‘Go spend it.’ Well, what do you spend it on? Unless you get something that is going to help you beyond this year … I don’t want us to have a one-year approach."
This is some good news. The fear (which is very real, in my opinion) is that Dayton Moore knows his job is on the line. And when a GM is fighting for his job, they will sacrifice the long term. It's human nature. Hopefully, this means they aren't going to do something foolish... Like a Wil Myers trade for two years of starting pitching.
David Glass is trying to justify his budgets. Except the numbers we have at our disposal, don't help his cause. The Process has gotten us to this point. Now it's time for the Royals to be bold and make a move. Waiting serves no purpose. The money is there. It must be spent. And it must be spent wisely.